Posted
by
timothy
on Tuesday June 30, 2009 @10:44AM
from the oh-just-wait-for-the-feds-to-tax-it-instead dept.

Rand Huck writes "Amazon.com has now added Rhode Island to its blacklist of affiliates in response to its proposed budget changes to enforce a tax on Internet sales, which includes commissions on their affiliate program by content providers based in Rhode Island. The first state to be blacklisted was North Carolina, for the same reason. If you go to a Rhode Island-based or North Carolina-based website that advertises Amazon.com goods as an affiliate, that website will no longer have the goods available because otherwise Amazon.com would be forced to pay sales tax to the State of Rhode Island and Providence Plantations or the State of North Carolina. The state's rationale is, if someone clicks to buy a good from Amazon.com via a site based in Rhode Island, it's equivalent to buying a good from a brick and mortar chain store located in Rhode Island."

I generally trust Amazon more than I do the small fry sites they 'affiliate' with.

What exactly do you mean? When someone clicks on one of the recommended books on my Amazon affiliate page*, they are taken to Amazon.ca where they can buy the book directly from Amazon. I don't handle any of their transactions, or ship any books; all my affiliate page does is give me a commission on any book that a visitor to my site may purchase if they access Amazon.ca through the links on my site. There's no additional 'trust' needed.

*which I am not going to link here, because that would be affiliate link spam. My site is in my sig if anyone wants more information on responsible products.

Unfortunately, the "no sales tax" only works for those who don't live in a state that houses an Amazon warehouse. Fortunately, for me, the Amazon orders arrive very quickly without having to pay the premium shipping costs.

>generally trust Amazon more than I do the small fry sites they 'affiliate' with.

I think you're a bit misguided here. The "small fry sites" you're referring to are sites, like mine [gorobotics.net], that link to Amazon products in exchange for a cut from Amazon. It's huge marketing for Amazon, and a tidy revenue for me and others. But not now. I'm in NC and I got screwed. Amazon hasn't killed people *selling* products, they've just cut off people that are doing free advertising for them.

>>I generally trust Amazon more than I do the small fry sites they 'affiliate' with.

I agree. I remember the first time I unwittingly ordered 5 things from 5 different vendors. I sat there for over two weeks wondering why one package showed up two days after my order while another took 15 days. And the quick package did me no good because all the things were for one project.

Nowadays I either order everything from Amazon proper, or I go directly to the affiliate's storefront since they probably speciali

You are required to pay the sales tax to the local government where you live.

Actually, it's unconstitutional for any state to charge sales tax on goods bought from another state. What you're describing is the "use tax" that many states have as a "work-around". Sadly, the days when people cared about the constitution seem to be behind us.

The only reason that online retailers don't charge you is because they would need to know and keep up with the tax laws of hundreds or thousands of locations, and set up payments to them. It would be prohibitively complicated.

Actually, that's trivial - you just buy software that does that for you. Plenty of "whole store" turnkey computer systems manage this, both the local sales tax and the local income tax by store address (you'd think it would be by ZIP code, but Philly has tax districts smaller than ZIP codes).

These are not the only states to impose this type of tax. NY requires collection of sales tax, but Amazon isn't shutting out those affiliates. If they want to make a stand, they should at least be consistent about it.

NY's AG started this whole thing and I think it's still being litigated. If Amazon stops doing business with NY affiliates then it may be seen as evidence of admission of guilt or whatever and NY's AG wins. If they continue to litigate and win they can then go back and start up their other affiliates

I thought they were being consistent. The NY law, which doesn't get your affiliates kicked out, taxes purchases made by residents of NY. The new laws that are getting affiliates banned tax purchases made from affiliates registered in those states.

So if you lived in NY and you wanted to buy something from an online affiliate located in RI, you would have to pay tax in both NY and RI.

And that's the problem with it. The Commerce Clause was put in the constitution to prevent things like this double-taxing for interstate commerce. If it's not as popular in some states to tax purchases made by residents, then they're going to try to get tax money from outside the state. It shouldn't hold up to constitutional standards on the issue, but that doesn't mean it will be overturned if challenged.

These states don't realize that anyone doing major affiliate sales will either get around their taxes, or the bans that affiliate programs place on a state. There is always an overseas country willing to take a bunch of rich technologically educated people.

Amazon is trying their best to avoid having to collect sales tax (and compete on a level playing field).

Wrong. RI and NC are trying to expand the definition of nexus to force mail order companies not located in their state to collect sales tax from citizens in RI and NC.

At present the playing field is level. Businesses outside RI and NC don't have to collect RI and NC sales tax, and business inside RI and NC don't have to collect tax for the rest of the country. That's pretty fair.

This is difficult, because an internet retailer is a lot like a catalog retailer, who might have 80% of their business out of state and isn't set up to take 50 states' differing tax rates and does not have the accounting muscle to pay 50 different state taxes each quarter. I think that's the main problem. And then you have the issue of ship to in one state (NC for example) and bill to (non-taxable like Oregon) etc etc. It creates a lot of headaches. Catalogs typically only pay/charge sales taxes for the state their accounting division is in. Multiply this by millions and millions of customers and you can see why Amazon would oppose this merely on the accounting issue. Most accounting software simply isn't set up for taxation in all 50 states, especially automatically.

and does not have the accounting muscle to pay 50 different state taxes each quarter. I think that's the main problem

Doesn't have the accounting muscle? Why can't they use their cloud computing cluster?

The "acounting muscle" argument is pure BS - they have enough accounting and computing horsepower to run the rest of their business... and they do a lot of calculations for every shaopping cart on every page refresh. Since they CAN cut off specific states, and they also calculate shipping by state, they can certainly do sales tax by state. They're just doing this to get their affiliates to lobby for them.

Since they CAN cut off specific states, and they also calculate shipping by state, they can certainly do sales tax by state.

It's not that simple.

You can't just assess sales tax according to the destination state. In many states, there are local taxes as well, and it varies based on the locality. A merchant calculates sales tax based on the MERCHANT's location, and the various taxing authorities make sure he/she knows what should be collected.

The shipping companies provide rate tables based on ZIP code, and it's a simple lookup. But, you can't even use ZIP codes to determine tax rates, because ZIP code boundaries don't necessary follow political boundaries.

The consumer is certainly governed by the laws of the state of their residence, and is required to pay consumption taxes on all purchases (a sales tax IS a consumption tax). When you buy something out-of-state,you're supposed to pay your local sales tax, and apply for a reimbursement from the originating state. Small purchases have been ignored, but try buying a new boat or car in one state and taking delivery in another - when you go to register the vehicle, you'll be required to pay the sales tax. The o

I think that would work out very well: Congress dictates ONE tax for the internet in terms of sales tax. It's ludicrous to force anyone (even if they do have the resources) to have to divert resources to figure out fifty different sales taxes. Also, there is the risk of being double-taxed at stake (Company A pays sales tax wherever its accounting division is located, and passes it on to customer, and then customer has to pay sales tax again of his/her home state).

The State of South Dakota charges a different rate per city. PER CITY. Each city's rate ranges from 2-6% if I recall correctly. Also some states (NJ, Indiana in 2007) change their rate on occasion. And then dealing with non-profit (non-taxable) institutions? That means waiting for an official tax exemption certificate, of which every state has different rules. Schools and Non Profits buy a lot of junk. A Lot. You have no idea how much man power it takes to explain why, to Betty at Podunk Baptist Church, Rural, IL - she needs to find, fill out and fax/mail a tax exemption certificate before you can process her order. And then deal with her angry pastor three months later when their order never arrives because she didn't/forgot to/sent the wrong form. This is a huge, huge bitch to deal with for companies beyond Amazon.

You can't calculate tax just by zip code - if you could, it'd be simple. You have to account for states, counties and municipalities, and zip codes don't line up completely with at least the last two. Zip+4 might, but that in itself is a nightmare (Zip+4 can be down to 10 or fewer individual addresses).

A couple of examples: I live in a suburb of Chicago that gets much of its revenue from sales taxes on malls, etc. within the city limits. Its tax rate is different from the next municipality over, but my zip code overlaps that suburb. Another example: my office is in a town that straddles the border between Cook County, IL and Lake County, IL. The Zip code at my office (in Cook) and at the hospital where I have customers (in Lake) are the same, but the tax rates differ by 3% (Cook has among the highest sales taxes in the nation, if not the highest).

You're telling me that a small child could write a look up table for the sales tax in every zip code in the U.S., including a system to update it every time one of those places changes their rate? Oh yeah, it also has to adjust for WHAT is taxable in each of those zip codes.

Well, there's 50 state sales tax rates, plus thousands of county and tens if not hundreds of thousands of city sales tax rates. Plus special districts. And not all of them line up on ZIP code boundaries, in many places part of a ZIP code's inside a city (subject to city sales tax) and part is outside (exempt from city sales tax). And then you have the fun of exactly what items are taxable (and it's not binary, in many places items are classified differently by the different taxing authorities so just because an item's subject to state sales tax doesn't mean it's neccesarily subject to city sales tax). And those rules change, so just because the rules say one thing this week doesn't mean they'll say the same thing next week.

So how does a business get an authoritative answer (one it can rely on in a court of law) for any arbitrary address? And how does it get notified by all those taxing authorities when the rules it needs to follow change? One of the principles of law is that the people who have to obey the law must be able to know what they need to do to obey it, and while I see all these states making lots of noise about businesses being obligated to follow the law I don't see them setting anything up to tell those businesses what the law actually says. And it's the responsibility of the goverment involved to tell the businesses what the law requires, it's not the business's responsibility to guess at it.

Not just because I'm greedy either. Lower prices due to not having to maintain a brick and mortar store are the only things that allow online stores to compete against local stores. Because if you buy it locally you get the product instantly. And they have to be sufficiently lower including shipping costs to beat out brick and mortar stores. If you take away a huge portion of their tax advantage, they start to become tremendously less profitable, and thus less viable.

Having worked on ERP accounting systems, I can say that sales tax should always be calculated based on the ship-to address. That said, smaller accounting packages may not be set up to support taxation for all 50 states.

However, any large corporation should understand that using a system that IS capable of handling multiple tax jurisdictions is an expected cost of doing business.

For Amazon, this is certainly not about complexity. It's about the sales tax - it will no longer have a "discount" compared to local brick and mortar stores, by avoiding this extra cost that they have to pay. Thus, it will either lose some of its edge - or reduce its profits.

Then there is the issue of what is taxed and what is not. Like the federal tax, the complications come in when a the brother in law or sister in law of a high ranking government official wants special treatment for their unique situation. Of course, when the taxes become simple, then it become a simple matter to avoid the tax.

These are not impediments to Amazon doing business, as they do enough business in all the states to pay for the software that would allow them to pay sales tax. If a vendor did hav

I run a brick and mortar store AND an online store. No more than 5 minutes ago I was talking to a customer in the store, and she was asking what the sales tax was to see if she could buy the product cheaper online. That's ridiculous. People are short sighted and selfish. If this continues, we will have very little retail anywhere in the country in a few years, because everybody will be trying to avoid the sales tax. The gov't needs to close this huge loophole. Amazon needs to compete on a level playin

add a bit of code to my web site to collect sales tax correctly all over the country

Don't forget that quarterly, you'll have to file and submit all those pennies to 50 different locations. Then, what if the city and county steps in and says, "you know what, all these people are in our city are buying stuff outside our city, we want taxes for that." Do you think you would still be in business if you had the overhead to deal with taxes for 50 different locations, let alone how ever many cities/counties would start wanting taxes from you.

People are short sighted and selfish. If this continues, we will have very little retail anywhere in the country in a few years, because everybody will be trying to avoid the sales tax.

Mail order has *always been there* and always presented the option of letting people purchase out of state and duck paying sales tax. If your state has a confiscatory sales tax rate that makes mail order 7-10% less expensive, then move your business somewhere else or let your legislators know that sales tax is ruining your business.

Oh, and it's not a loop hole. It's called the commerce clause of the US Constitution. It protects your business from being subject to the laws of all 50 US states as well as preventing states from creating tarriffs and anti-competitive laws to keep out of state competitors like you out of the market.

I'm in Massachusetts. If I happen to visit the website of the Trinity Repertory Theater (www.trinityrep.com), a theater located in Providence, RI, then my internet traffic doesn't even pass through Rhode Island, much less end in Rhode Island. Their website is hosted by a low-cost provider out in California. The only tie to Rhode Island is that the website was created by an organization in Rhode Island. If I visit that website I don't "visit" Rhode Island. So why should Rhode Island have ANY claim on anything I might purchase from an affiliate program hosted on that site? I'm visiting a website hosted in California and if they were an Amazon affiliate then that would involve a company located in Washington. RI doesn't have any valid claim to tax such a transaction.

By their own logic, I'm buying goods from a brick & mortar store in California (or more appropriately Seattle), NOT Rhode Island. If anything, the company in RI is simply acting as an advertising agency. They designed an advertisement (the website) that's on display in California for a company that actually does business in Washington.

By the very same reasoning they use for Amazon, if anyone goes to a phone located in Rhode Island and makes a purchase of anything, it's the same as going to a brick and mortar of that shop in the state and is also subject to equivalent taxes. Even ordering by US mail out of a catalog would reason out to the same logic (providing the catalog and/or mailbox is physically located in R.I.). Amazon might even be able to use that to force R.I. to either include phone orders across the board or drop the bill/law.

The problem with this story is that it isn't clear where the sale has taken place. I click a button in Massachusetts, paid for the object with money from a Connecticut bank, the company hosting the web site is in New York, the headquarters of the company is in Arkansas, the shipment is made from New Hampshire, my mom receive the materials in Illinois (I dropped shipped her a gift). Where was the sale?
I don't know what the right answer is... but I'm certain that state legislatures rushing to get something passed will end up making a mess bigger than the one they find themselves in now. I don't blame Amazon for pushing back. If I were Amazon management I'd be doing the same thing.

Amazon is basically screaming: "Taxation Without Representation" and taking a stand against what it believes is unconstitutional taxation. (ie being taxed by a foreign (different state) government) This is exactly what happen in the mid-late 1700s and the reason the US is it's own country rather than part of the United Kingdom.

I completely agree with Amazon. I happen to have an Amazon shop (I'm not located in either of those states) I know it screws the webstore owner, but Amazon is doing the right thing and THEY need to stand up to their own state's goverment and let them know that they are hurting their own people by being greeding and trying to tax people that don't even live in their state.

For the zillionth time, RHODE ISLAND IS TRYING TO COLLECT TAX FROM RHODE ISLANDERS! It has nothing to do with out-of-state anything. RI is trying to force amazon to collect RI sales tax from RI residents (or at least people with RI shipping addresses) by claiming that amazon has affiliates based in RI, and thus has a physical presence just like Walmart or Target.

So the store doesn't get a sale, doesn't pay the stakeholder, who was presumably going to spend money in the state on taxable goods and services. The state still loses. The original sale doesn't generate revenue and the seller won't be purchasing anything that generates tax revenue with the proceeds of the sale that didn't happen. Sorry states, there will always be at least one state that will take advantage of this and host amazon friendly affiliate websites. This is kinda like how you can incorporate an LLC in any state you have an "agent" in (100 bucks a year gets you agent representation in any state) but no one in their right minds incorporates an LLC outside of Nevada or Delaware because of the incredibly low taxes and business friendly body of case law they've produced. You still have to pay personal income tax in the state you perform work but you get a credit for taxes you pay to other states for your state of residence taxes.

It's not that they're being unreasonable, per se. It's that they're applying and old model to a new technology. It's a bit like trying to do rocket science with the math available to Aristotle.

Physical location matters little on the Internet. But our countries and states are defined by physical location. So it's not a trivial problem, but applying solutions that simply don't fit will not solve anything.

Amazon does not have brick and mortar stores. So it's not the same. In fact, when the tax laws where written that apply to "mail-order" they understood this basic concept. Based on those laws you only have to pay sales tax if the company you're ordering from has stores(brick and mortar) in your county.

Facts: Amazon pays taxes. They pay taxes on their employees, properties, income, purchases, etc. The shipping companies also pay taxes. In order to pay all of these taxes the price of their products and services get marked up.So, when you order an item from Amazon, a surprising amount of what you're really paying for is indirect tax. Including local taxes paid by the shipping company.

The gross tax lean across the US is over 50%. It's insane. Anyone who agrees that there should be any new and/or more taxation is a complete and utter moron. More taxation increases the cost of living, which increases poverty, which increases crime rates, which has the end effect of idiot politicians stating that we need more tax. It's a corrupt cycle that killing this country and needs to end.

Why would I or Amazon have to pay taxes twice or more for something? First Amazon would need to pay taxes at whatever locale they're at, then I would need to pay taxes on the same product in my home state, then also every state it goes through as it is getting shipped from Florida to Rhode Island?

There is a reason intra-state purchases are not taxed. Read the constitution or so, you know the part where it says: The Congress shall have power . . . To regulate commerce with foreign nations, and among the several states, and with the Indian tribes

Do you know how much superhighways take to maintain? The Internet is the information superhighway, so the taxes go to pay for travel on it. When you drive to Amazon, you're putting wear on the superhighways of the state Amazon is based in, and then Amazon has to drive your order to the affiliate, which puts wear on the superhighways to the affiliate's state. That's a lot of virtual wear!

Then the government needs to fix its tax structure, not try to charge us more sales tax.

It's simple: fuel tax pays for roads. If it's not enough, then raise the fuel tax. Instead of hobbling the economy by taxing everyone for purchases, it would make a lot more sense to tax road users for their use of the road, and let that cost be passed on as appropriate (i.e., someone shipping lots of heavy stuff will be forced to raise prices, whereas someone selling digital goods won't).

The local state has the right to tax their residents out-of-state purchases. When you buy something in another state, you're supposed to pay your local sales taxes, and then file for a reimbursement from the state you paid the original tax to - but it's not enforced. Now the individual states ARE saying - hey, here's a way we CAN enforce it.

No, this is no more than another reach where states are trying to end run the commerce clause which has prevented them from successfully taxing out of state mail order purchases. This one is especially stupid because they are saying "because Amazon does business with contractors in our state, they have to act as a tax collection agent for us." This is a change in two ways:

* The state is extending the definition of "nexus" to include the use of contractors. Historically, a nexus includes employees and/or property.* The state is basically telling mail order merchants to not spend a dime in the state or you have to become a tax collection agent for the state.

Basically, N. Carolina and Rhode Island are shooting themselves in the head and preventing mail order operations from using any in-state contractors to do things like print catalogs, mail catalogs, provide call center services, freight forwarding, delivery services and so on. In other words, no jobs for your state from any mail order company.

This is why there is a commerce clause in the constitution - to prevent one state from taking actions that unfairly burden a business or citizen in another state. Why should I care what sales tax is in California? My business is in Indiana. Eventually this will go to the supreme court and get tossed just like every other attempt by one state to make businesses in another state collect taxes for them. This has been building up for a while and we're due for another 8-1 decision in favor of the Federal Government having EXCLUSIVE jurisdiction over interstate commerce.

Your entire post is just wrong. First, Amazon dosn't pay sales tax on items you buy from them in thier home state unless it is a state where they have a nexus. Second, if your home state has a Sales Tax it most likly has a Use Tax and you are supposed to pay that tax on items you buy from out of state that haven't had sales tax paid on them in the other state and sometimes even if it has. This has NOTHING to do with the Commerce clause of the US Constitution.

I believe all sales taxes should be abolished in favor or progressive income taxes

And I believe just the opposite. The federal income tax should be abolished, then the size of the federal government cut back to it's Constitutional limits. Once that's done if user fees aren't enough them have a federal sales tax. People should not be taxed for their hard work, just for what they buy and or use and the pollution they create.

Why would I or Amazon have to pay taxes twice or more for something? First Amazon would need to pay taxes at whatever locale they're at, then I would need to pay taxes on the same product in my home state, then also every state it goes through as it is getting shipped from Florida to Rhode Island?

You wouldn't. Amazon doesn't pay (sales) taxes at whatever locale they are at. And no state can charge a tax for shipping goods through the state (as mentioned in your Constitution excerpt), except as a fee for using the road system. That only leaves the final point of sale.

Why should ordering something over the internet and having it delivered to your door result in you paying less sales tax?

There is a reason intra-state purchases are not taxed. Read the constitution or so, you know the part where it says: The Congress shall have power . . . To regulate commerce with foreign nations, and among the several states, and with the Indian tribes

First, the word you are looking for is interstate. Intrastate purchases are taxed. Secondly, the interstate aspect of the transaction is not being taxed, rather it's the purchase in Rhode Island of a good that is.

I fail to see the distinction between paying sales tax on goods purchased at Amazon and goods purchased in a local Walmart (when discussing non-Washington/Arkansas residents). In either case you're purchasing an item in, e.g., RI and accepting delivery there. The actual charges are applied from a credit card company in Deleware to an account, which you will then pay later with a check drawn on some other corporation. Why should the Internet be magical?

And my infrastructure pays for parks I enjoy, roads I use, schools which educate the people around me so that they don't all turn to street crime, police to deal with the ones who do, etc. Taxes buy me civilization.

I don't believe that is true, at least not according to this:

In 1984, the Grace Commission was formed by President Reagan to examine where tax revenues disappear to inside the great government money maw. The commission reported that none of the money collected by income taxes paid for services - all income-tax revenue serviced the national debt. The commission said that one third of income taxes,

. . . is consumed by waste and inefficiency in the Federal Government as we identifi

Why would I or Amazon have to pay taxes twice or more for something? First Amazon would need to pay taxes at whatever locale they're at, then I would need to pay taxes on the same product in my home state, then also every state it goes through as it is getting shipped from Florida to Rhode Island?

Please understand how sales taxes work before you submit nonsense like that.

I'm not going to explain the whole system, but suffice it to say that if I pay sales tax in one jurisdiction, then that tax paid is a cre

I doubt its amazon links you see spammed, they're pretty strict about bad practices. If you see such for amazon links, you can report it and they will look into it (and disable the affiliates account without payment if he has violated terms of services)

The ones you see spammed are usually something shitty like "get 1000's of your friends click this link and earn $0.001 per click!"

They already do, considering that they're consuming approximately 0% of the state's resources.

Sales taxes are taxes on CONSUMPTION. The CONSUMER isn't paying their fair share, and Amazon is the enabler. Consumption taxes help pay for your local schools, etc. Your local retailer does their share, and so do their customers. Since Amazon's customers aren't paying their fair share of consumption taxes, your local retailer is paying MORE than their fair share. Your

Taxes are never levied for the benefit of the taxed. I live in Oregon (NO Sales Tax!) so I REFUSE to pay yours. I never voted for it (Taxation without representation ring a bell?) and my states has voted NO on sales tax NINE TIMES. Fix your deficit the way all of us do: Spend less. Too many state wastrels on the payroll? fire a few.

Taxing more things is not a fix for a budget deficit. You don't give a coke addict more coke because they're going through withdrawals. All 50 states need to learn to balance their budgets by *gasp* spending less money.

State revenues have fallen through the floor. California how has the worst credit record around, and on July 2nd will start issuing IOUs instead of cutting cheques, because they're out of money.

They have to do this because lenders won't take California IOUs (bonds) because California can

They have to do this because... California can't raise taxes enough, thanks to Proposition 13.

And I suppose the person with 50k in credit card debt and a house in foreclosure is also in that situation because they can't raise enough income?

I'm sure it has nothing to do with the million dollar house and their insatiable desire for new goods. A good rule of thumb for people (and states for this matter) in debt is to first create a budget that reduces spending below ones income. Not to figure out a way to make more money. This is not rocket science.

"The accumulated deficit will be between $20 Trillion and $25 Trillion by 2016 - everyone agrees it's not sustainable, and that taxes will have to rise."

Well, they could stop spending. They could start to consider that this massive govt. run healthcare (regardless of your views on it) is something we absolutely cannot afford right now. They could stop with the pork in bills.

Why can't the govt. do what a 'sane' normal household does when it is having budget problems. The first thing is to cut spending!!

"So why are we already spending tons on health care? he average is at 4K per american right now. Higher than the supposedly expensive Canadian healthcare (which is at around 3K a person). You can't cut it both ways. You either accept that those with no insurance will be turn away and left to fend for them selves or you give basic coverage and reduce the paperwork and control the price inflation of health care."

Well, from everything I'm seeing and hearing now...this current govt. healthcare thing will cost aobut $1Trillion additional money, and still leave about 35 million people uncovered.

How about just starting with regulating that insurance companies can't deny you for pre-existing conditions. How about broadening the HSA (Health Savings Account) to be more flexible and allow more citizens to save MORE of their own money pre-tax for their routine health needs, and only need insurance for catastrophic needs?

I did that for awhile and it was great. Why should people not budget for routine health needs like they budget for other things in life (food, shelter, etc)? Hell, when I was doing that and told Dr. and labs I had work (even an MRI) I was paying on my own, they gave me at least a 15% discount right on the spot.

I found that I could shop around for Dr. and what all for best price and service. That puts true competition back into the system...that would lower costs, it also cuts out the bean counters and other middlemen.

Trouble is...that wouldn't allow the govt. to have a heavy hand in the midst of it all, and with the current govt...that isn't a goal of their apparently.

Proposition 13 isn't the problem, it really isn't. The problem is the state legislature which continues to add socialist benefits to socialist benefits.

The Political Beast eats its own, creates an unsustainable welfare state, paid for by exorbitant taxes. We currently have Sales taxes fast approaching 10%, chasing the merchants from the state. Brick and Mortar shops cannot compete with Amazon's sales tax free setup, even if the prices are the same, and you include shipping!

If they have to pay taxes, and if we have to pay sales tax on such things, it increases the costs for everyone. Amazon does pay taxes in the places they have physical facilities. They do not want the expense of having to collect and pay sales tax in every jurisdiction in America. There's more to this than just state tax, there's county, city, township and even school district level sales taxation in different states in the US.

If you buy something out of state, you're supposed to pay the sales tax to your local state and then apply for a reimbursement from the state you paid the original tax in.

Wrong, as with most of the rest of your post. There is no such "reimbursement". If a resident of Maryland physically goes to Pennsylvania and buys something, the sales tax on the transaction is owed to Pennsylvania. There is no reimbursement, even if Maryland also demands a "use tax" on the item.

The Supreme Court decided some time ago (in a mail order case, not an Internet case) that companies could not be required to collect sales taxes for states in which they did not have a "nexus". It's not a matter of a "tax holiday" or of Congress sitting on their behind; Congress has no obligation to act for the states in this matter. It's not a matter of enforcing state law. It's a matter of states trying to widen the definition of that "nexus" beyond what the courts have accepted in the past. It probably won't work, but Amazon isn't willing to get into a court battle over it. Newegg, on the other hand, after initially collecting New York tax, ceased doing so after consulting their lawyers. NY has apparently not taken them up on the challenge.

I can't speak for anyone else, but providing yet another source of revenue for government is the last thing I want. The US government already spends more than any other government in the world, and (surprise) the result isn't even close to ideal.

No, what the US government needs is less spending -- or even a change in where the money goes -- certainly not more revenue.

Amazon is taxed. They aren't getting a free ride. Everyone is already required to pay a sales tax on the items they buy out of state anyway. In your state tax filing it is usually listed under Use tax.

So amazon isn't going to pay any more in tax, the people that are evading taxes would be paying for the tax.

I'm not sure about that. I thought there was something about the equivalent of "trade" vs. sales? Sort of like craigslist? I didn't think those sorts of "sales" counted as a sale, and thus didn't have to be reported for tax by the use tax.

No. Amazon is simply not collecting sales tax for states they are not located in. Why should Amazon (an out of state company) have to pay to do the job of the RI Department of Revenue? Since when did they delete the commerce clause from the constitution?

"Once wealthy individuals pay their fair share of taxes, then we can talk about eliminating some business taxes."
You mean once ten percent of the population no longer has to pay ninety percent of the taxes?
You mean when fifty percent of the population finally pay more than zero net tax?
You mean when the vast majority stop getting more benefits than they are paying for then maybe we can spend less?
Yes that sounds great.

A much better solution then, would be to end the sales tax in the various states to promote more competition with the internet retailers. I realize that taxes are a necessary evil, but let us not spread that evil any further that it has already gone. Every time the government sucks a penny out of the economy we are all the worse for it.

So how do you propose we pay for roads/police/fireman/military etc..... you are saying we are ALWAYS worse if the government takes some money to pay for these things? I think we would be much much worse if we weren't taxed and these things weren't paid for.

No governments only diverse taxes when they have helped for example you can charge sales tax on some things because you (presumably) drove on government roads to get there. On the other hand, when I order something online especially virtual goods like a song, e-book or movie what did the government do to deserve the tax? Nothing. Therefore they should not be taxed.

Amazon started litigation to fight the New York tax that is ongoing. By refusing to do business there, they would lose the legal case because they would be admitting the tax is legal.

They are taking the position they have in other States, partly because the States are smaller, and partly because they would be forced into more litigation over the same issues they are fighting in New York. I would bet their lawyers believe they will eventually win in SCOTUS and then they will restore their old practices